Yahoo! CEO Announces 10 Percent Reduction in Staff

On Monday reports emerged that Yahoo ! would end 2008 the way it rang in the new year back in January. That is, pink slips for an unspecified number of employees. While January’s cuts saw 1,000 Yahoos lose their jobs at the search company and rumours about this weeks cuts varied when it came to numbers.

Yesterday, Yahoo ! CEO, Jerry Yang, announced the company’s earnings for Q3 2008 (which were bad but not woeful) and soon after sent out an email informing Yahoo staff that they would be cutting 10 percent of the global workforce in an effort to streamline business.

Yang, sent out an email (in all lowercase) to and after a three paragraph build up about “reaching out” to employees and the “challenging times” the company has been through in the last year, he finally got the the point. By Christmas, 10 percent of Yahoo !’s workforce will be gone, a figure many feel falls short of what the company needs to cut in order to make any kind of reduction in employees profitable.

Yang explained that as part of yesterday’s Q3 earnings release, the company’s goal was to reduce it’s current annualized cost run rate of roughly $3.9 billion by more than $400 million before the end of 2008. He went on to say that while they would target non-headcount expense where ever possible, compensation expense are the singly largest part of the company’s costs.

10 percent of Yahoo !’s work force is roughly 1,500 people, 500 more than what the company cut back in January. However, by June of this year, Yahoo !’s headcount was reportedly back up to what it was before the New Year’s layoffs. Yahoo ! needs to either recut the original thousand and then decided where it should go from there in terms of layoffs or sack this 1,500 and make it stick.

Yang’s full memo below.


i feel it’s important for me to reach out to you after our earnings announcement, and before our all hands meeting tomorrow.

we as a company have been through a tremendously challenging year ; and managing the increasingly turbulent global advertising climate has been an important focus for the last three months.

throughout the first three quarters of 2008, we have been balancing between investing in our top priorities, and managing our cost structure. beginning in september, with the help of Bain & Co., we initiated a series of steps to determine how we can become more efficient and productive as an organization.

we heard from you through the YEES survey, and through your suggestions on backyard, and we’ve identified many areas that we all feel we can improve upon. our productivity efforts, based in part on what we heard from you, will involve initiatives such as streamlining our organizational structure through reducing layers and increasing spans of control, and eliminating redundancies. longer term structural efficiencies include consolidating facilities, improving procurement, and standardizing our global technology platforms.

today as part of our q3 earnings release, we said that our goal is to reduce our current annualized cost run rate of roughly $3.9 billion by more than $400 million before the end of 2008. we are targeting non-headcount expenses wherever possible, such as facilities and outside services. however, because compensation expenses are the single largest part of our costs, we anticipate a reduction of at least 10% of our global workforce by year-end.

affected employees will be notified of layoffs in the next several weeks. we understand that hearing this news now creates uncertainty, but we are moving ahead in a way that balances speed with a clear focus on accomplishing what is necessary to set the organization up for long term success. going forward it will continue to be important for us to make the right decisions to keep our business efficient and strong.

having layoffs is very difficult, particularly in light of all we’ve experienced this year. but we don’t take these decisions lightly, and are committed to treating affected employees fairly, offering severance and outplacement services.

the steps we are taking are not easy for us as a company, but as we become more fit as an organization, decision-making will be faster and it will be easier for us all to get more done and stay focused on our strategy. these changes will also prepare us to better deal with the macroeconomic downturn. as with previous downturns, yahoo ! continues to be a place where consumers turn for information and communications, and is an integral part of their internet day. as the global economy improves in the future, i certainly believe that we will be stronger and benefit from the actions we are taking now.

as always, i thank you for all you do as yahoos.

best, jerry"]

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